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on Innovation |
| By: | Manuel Portugal Ferreira (Instituto Politécnico de Leiria); Fernando Ribeiro Serra (Uninove – Universidade Nove de Julho); Benny Kramer Costa (Uninove – Universidade Nove de Julho); Emerson Maccari (Uninove – Universidade Nove de Julho); Hergos Couto (Uninove – Universidade Nove de Julho) |
| Abstract: | The ability to generate innovations and capture the rents from innovation are important for firms’ competitive advantage. Increasingly firms seek knowledge abundant locations, or industry clusters, to access novel knowledge and generate innovations through knowledge recombinations (Schumpeter, 1934). We examine how different types of clusters impact on the innovation output, the knowledge flows among the clustered firms and, ultimately, on who captures the rents from innovation. The type of cluster reflects the configuration of firms and the interactions among firms, individuals and agencies in the cluster and is likely to be a major driver of both the innovative output and of which firms will be more likely to capture the rents from innovation. Extant research has noted that the social and business networks binding firms in clusters are excellent vehicles for the flow of knowledge that eases innovations, but different types of clusters may lead to different outcomes. |
| Keywords: | clusters; types of clusters; innovation; appropriation of rents; innovation rents |
| JEL: | M0 M1 |
| Date: | 2013–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:pil:wpaper:102&r=ino |
| By: | Manuel Portugal Ferreira (Instituto Politécnico de Leiria); Fernando Ribeiro Serra (Uninove – Universidade Nove de Julho); Emerson Maccari (Uninove – Universidade Nove de Julho) |
| Abstract: | Innovating firms face the dilemma of knowing when they will be able to appropriate the rents accruing from their innovations. Only the future value of the rents creates an incentive to innovate, and all innovations that are either imitated or improved upon by competitors preempt the innovator firms from capturing their rents. In this conceptual paper, we observe boundary conditions under which protection guarantees appropriation. A paradox emerges in that innovators benefit from networking and bandwagon effects but not from total diffusion of the knowledge. While networks are excellent vehicles for innovation, the business and social ties connecting firms deepen the hazards associated to the appropriation of rents. |
| Keywords: | innovation, innovation rent, network ties, diffusion of knowledge, bandwagon effects, complementary assets |
| JEL: | M0 M1 |
| Date: | 2013–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:pil:wpaper:101&r=ino |
| By: | Brancati, Emanuele |
| Abstract: | Financial frictions may represent a severe obstacle to firms' innovativeness. This paper shows the existence and quantifies the effects of financial barriers to the innovation propensity of Italian companies. Employing direct measures of financial constraints and a credit-score estimated ad hoc, I find firms that suffer from financial problems to have a probability of innovating that is significantly lower than sound companies (-30%). The paper also documents the existence of a feedback-effect of innovation on firms' financial position. Results suggest that the innovative propensity of a company is further affected by the consequences that the choice to innovate has on the likelihood of facing constraints. This in turn is reflected onto a stronger depressive effect of financial constraints on innovation (-34%). Finally, the paper also provides evidence on the role of soft information in mitigating financial obstacles for innovative companies. Relationship lending is found to improve the financial condition of more opaque (small) borrowers and to reduce the overall effect of financial constraints on innovation. |
| Keywords: | Innovation; financial constraints; relationship lending; ratings |
| JEL: | G21 L25 O31 |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50329&r=ino |
| By: | Andrea Caggese (Pompeu Fabra University) |
| Abstract: | This paper develops the model of an industry with heterogeneous firms, and studies the effect of financing frictions and bankruptcy risk on innovation and aggregate productivity growth. The model has two main features: i) the technology of firms gradually becomes obsolete. Firms can counter this process by innovating, but the innovation outcome is risky. ii) Financial frictions cause the inefficient default of financially fragile firms, deter entry, and reduce competitive forces in the industry. I calibrate and solve the model and simulate several industries, and show that financing frictions have two distinct effects on innovation: a "direct effect", for firms that cannot innovate because of lack internal funds to invest, and an "indirect effect", where the changes in competition and profitability change also the incentives to innovate. Simulation results first show that, for realistic parameter values, the indirect effect of financing frictions is much more important than the direct effect in determining the innovation decisions. Second, they show that "Safe innovation" (where firms invest to upgrade their technology and are certain to increase their productivity) is increased by the presence of financing frictions, because the reduction in competition increases the return on innovation. Conversely "Risky innovation" (where firms invest to improve their productivity, but with some probability fail to do so and end up reducing their productivity instead), is discouraged by financing frictions. This happens because the reduction in competition implies that firms remain profitable for a longer time and therefore they wait longer before attempting a risky innovation process. I test these predictions and their implications for productivity growth on a sample of Italian manufacturing firms, and I find that the life cycle and innovation decisions of firms are fully consistent with the model with risky innovation. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed013:300&r=ino |
| By: | Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF; UTEN); Marlene Grande (University Technology Enterprise Network (UTEN)) |
| Abstract: | Academic and political interest in Academic Spin-offs (ASOs) has increased significantly in Portugal in the last few years. Although these firms, created to exploit the results of scientific research, are considered important contributors to employment and wealth creation, in the Portuguese case, their impact has been modest, at best. Based on a sample of 101 ASOs associated to the members of the University Technology Enterprise Network (UTEN), we found that ASOs are quite small (employing on average 9 full time equivalent individuals and a turnover of 300 thousand euros). Besides being highly R&D intensive, Portuguese ASOs are internationally-led with almost half of the respondent firms involved in exporting. An econometric analysis revealed the relevant role of certain types of S&T infrastructures and support mechanisms for the economic performance of ASOs In particular, access to incubators, access to skilled labour, and support in terms of business mentoring and counselling emerged as significantly and positively related with ASOs’ sales per worker. Moreover, their economic performance is extremely dependent on internationalization dynamics, with firms that export outperforming their domestically-based counterparts. The lack of economic return on R&D performed and patents registered by firms indicates that the steady investment in science, technology and innovation in Portugal in the last decade, although undoubtedly necessary, has not yet materialized sufficiently to push the system towards solid, productive and value added firms. Therefore, policies aimed at accelerating ideas and knowledge into internationally competitive ideas and products are required. |
| Keywords: | Academic Spin-offs; S&T infrastructures; Portugal; UTEN |
| JEL: | L25 L29 O34 O38 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:502&r=ino |
| By: | Giammario Impullitti; Omar Licandro |
| Abstract: | The availability of rich ?rm-level data has led researchers to uncover new evidence on the effects of trade liberalization. First, trade openness forces the least productive fi?rms to exit the market; secondly, it induces surviving fi?rms to increase their innovation efforts; thirdly, it increases the degree of product market competition. In this paper, we propose a model aimed at providing a coherent interpretation of these ?ndings, and use it to asses the role of fi?rm selection in shaping the aggregate welfare gains from trade. We introduce ?firm heterogeneity into an innovation-driven growth model where incumbent fi?rms operating in oligopolistic industries perform cost-reducing innovation. In this environment, trade liberalization leads to lower markups level and dispersion, tougher fi?rm selection, and more innovation. Calibrated to match US aggregate and fi?rm-level statistics, the model predicts that moving from a 13% variable trade costs to free trade increases the stationary annual rate of productivity growth from 1:19 to 1:29% and increases welfare by about 3% of steady state consumption. Selection accounts for about 1/4th of the overall growth increase and 2/5th of the welfare gains from trade. |
| Keywords: | International Trade, Heterogeneous Firms, Oligopoly, Innovation, Endogenous Markups, Welfare, Competition. JEL codes: F12, F13, O31, O41 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:not:notecp:13/04&r=ino |
| By: | Cátia Pinheiro (Faculty of Economics of University of Porto); Paula Sarmento (CEF.UP and Faculty of Economics of University of Porto) |
| Abstract: | As the global economy becomes more integrated, the international fragmentation of the value chain activities becomes regular. Despite the recent wave of domestic and cross-border vertical disintegration, vertical integration of R&D remains a decision for some firms. The aim of this paper is to assess the main drivers and motivations for multinational firms to engage in R&D international insourcing, specifically selecting Portugal as the host location. Although transaction costs and resource-based view of the firm provide useful insights about the decision whether or not to integrate, we intend to assess the extent to which location specific features contribute for that decision. The main purpose is to understand if this location, i.e., Portugal, presents any unique features which may lead these firms to internally carry out R&D activities. Our results suggest that multinational firms tend to keep R&D activities in-house mainly because of costs and uncertainty issues and that Portugal was selected as location to set R&D both because of a market-oriented as well as technology-oriented strategy. |
| Keywords: | outsourcing; offshoring; R&D; Home base exploiting; Home base augmenting |
| JEL: | F15 D23 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:501&r=ino |
| By: | OECD |
| Abstract: | The paper brings together information collected through discussions and projects undertaken by the OECD Working Party on Nanotechnology (WPN) relevant to the development and use of nanotechnology for green innovation. It relies in particular on preliminary results from the WPN project on the Responsible Development of Nanotechnology and on conclusions from a symposium, organised by the OECD WPN together with the United States National Nanotechnology Initiative, which took place in March 2012 in Washington DC, United States, on Assessing the Economic Impact of Nanotechnology. It also draws on material from the four background papers that were developed for the symposium. |
| Date: | 2013–06–14 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaac:5-en&r=ino |
| By: | Alessandro Nuvolari; Michelangelo Vasta |
| Abstract: | In this paper we examine the phenomenon of independent invention in Italy during the liberal age (1861-1913). We make use of a new dataset comprising all patents granted in Italy in five benchmark years: 1864-65, 1881, 1891, 1902 and 1911. We carry out the following exercises. First we examine the relative shares of independent, corporate and foreign inventions and their evolution over time and across industries. Second, by exploiting the peculiarities of Italian patent legislation which established a maximum patent length of fifteen years and a flexible renewal scheme which allowed inventors to maintain a patent "alive" for almost any specific duration, we assess the relative quality of independent and corporate patents. Our results indicate that in Italy independent inventors provided an important contribution to technological change but the quality of their patents was significantly lower than that of firms and of foreign patentees. |
| Date: | 2013–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2013/20&r=ino |
| By: | Doh-Shin Jeon (Toulouse School of Economics); Yassine Lefouili (Toulouse School of Economics) |
| Abstract: | We study bilateral cross-licensing agreements among N(> 2) firms that engage in competition after the licensing phase. It is shown that the most collusive cross-licensing royalty, i.e. the one that allows the industry to achieve the monopoly profit, is sustainable as the outcome of bilaterally efficient agreements. When the terms of the agreements are not observable to third parties, the monopoly royalty is the unique symmetric bilaterally efficient royalty. However, when the terms of the agreements are public, the most competitive royalty (i.e. zero) can also be bilaterally efficient. Policy implications regarding the antitrust treatment of cross-licensing agreements are derived from these results. |
| Keywords: | Cross-Licensing, Collusion, Antitrust and Intellectual Property |
| JEL: | L44 O33 O34 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:1311&r=ino |